The New York State Department of Financial Services (NYDFS) has just awarded PayPal Digital a limited purpose trust charter. This is the same trust charter typically held by digital asset custodians and some stablecoin issuers.
Last August PayPal launched its PYUSD stablecoin, the first from a BigTech. Technically, the stablecoin issuer is Paxos Trust Company which also has an NYDFS limited trust charter. Paxos has also been PayPal’s partner for its cryptocurrency offering since its launch. Hence, there’s a possibility that the aim of the Trust charter is to take on the custody of PayPal client crypto-assets and move the issuance of the stablecoin in-house.
We contacted PayPal to verify the purpose but didn’t receive a response before publication.
It’s still early days for the PYUSD stablecoin, with the company recently enabling its use for cross border payments in its Xoom app.
Currently the PYUSD market capitalization is just shy of $400 million, which is up from $190 million in early April. However, wallets associated with the issuer Paxos account for more than $125 million of the balance, and these amounts may be held on behalf of PayPal. The top five wallets make up 71% of the stablecoin balance. Seventeen wallets hold $1 million or more and they account for 97% of the holdings.
The top five holders are Paxos, Crypto.com, Curve (DeFi), Defiance Capital and Frax (DeFi). Two crypto exchanges are now amongst the biggest holders – Crypto.com with a balance of $103 million and Bullish with $23 million.
Meanwhile, last November the SEC’s enforcement division issued a subpoena requesting documents relating to the issuance of the PYUSD stablecoin.
